Three quarters (74%) of Middle East respondents cite general economic instability as a significant concern in the region; this reflects the result globally where almost two-thirds of all respondents (63%) to the survey believe that general economic instability is the primary cause of limited funding to the transport sector.
Only 17% of regional respondents cite political instability as a major concern, in spite of events relating to the Arab Spring.
A stricter adherence to contract terms is sought by 46% of regional respondents, but in the context of increasing contractual renegotiation globally.
There is marginally more debt liquidity in the Middle East than elsewhere (52% sought or offered funding)
Emma Giddings, specialist asset finance partner in Abu Dhabi for Norton Rose Group, commented, "Although the Middle East transport industry will not be immune from the problems caused by global economic instability, the development of transport industry and infrastructure remains an important objective for many countries in the region. Investment in infrastructure is mentioned in our survey as one of the most important forms of state intervention and this remains a priority area for many regional governments. This perhaps explains in part why overall there appears to be more confidence in the transport industry in the Middle East than might be the case in other areas."
Globally the results show:Shipping has seen the largest decrease in business volumes since 2008 in comparison to aviation and rail. Almost half (44%) of shipping respondents estimate business volumes have fallen by over 5% since 2008, compared with almost a quarter (24%) of rail respondents and a fifth (20%) of aviation respondents.
Two-thirds (67%) of all respondents state that they are implementing or will implement operating cost reductions in preparation for further economic uncertainty.
A reduction in bank liquidity is driving the transport sector as a whole to look at alternative forms of finance. 23% of all respondents expect private equity to provide their primary form of funding over the next two years, whilst 16% expect capital markets to provide their principal source of funding.
The industry as a whole (39%) cites greater investment in infrastructure as the most helpful form of government support for their sector, increasing to almost three-quarters (71%) of rail respondents. Just over a quarter (27%) of all respondents expect their principal form of funding to come from government over the next two years, down from 45% at the end of 2010.
The industry is taking strategic measures ahead of further anticipated economic uncertainty, with two-thirds of all respondents reducing, or intending to reduce, operating costs and 41% of all respondents planning to retain cash.
57% of all respondents believe that a merger or joint venture will form a key part of their strategy over the next 12 months.
Harry Theochari, global head of transport, Norton Rose Group, commented, "Shipping is facing a number of challenges, reflected in the fact that business volumes are felt to have dropped more significantly than aviation or rail in this survey. The key strategic findings of this survey, from a purely business perspective, are that cash and the availability of cash is fundamental, and keeping operational costs down is imperative. In this time of highly developed economic modelling and sophisticated economic theory, basic business principles continue to apply."
The survey, entitled "The Way Ahead" is the third transport report released by Norton Rose Group. It details the views of 1,100 international respondents from a range of companies involved in transport including financiers, owner/operators, manufacturers, government entities and professional services firms.